Friday, February 22, 2013

Every Friday, the Brennan Center will be compiling the latest
news concerning the corrosive nature of money in New York State politics—and
the ongoing need for public financing and robust campaign finance reform. We’ll
also be linking to dispatches from around the country highlighting the national
scope of this crisis. This week’s links were contributed by Syed Zaidi.

After
former New York City Mayor Ed Koch sadly passed away this month, Frederick
Schwarz, chief counsel at the Brennan Center, explained in a New York Daily News op-ed how we can
honor Koch’s legacy. In 1986, when Ed Koch was Mayor, some of his top political
allies had been caught using their office for personal gain in a scandal that rocked
the city. Koch seized the opportunity to reform New York City’s campaign
finance system. Along with the City Council, he instituted a small donor
matching program with low contribution limits. In 1989, in the first election that followed, all three
mayoral candidates—Koch and David Dinkins, both Democrats, and Rudy Giuliani, a
Republican—praised the new system and participated in it. Today, the benefits of the system are even clearer:
the number of small donors to political candidates has grown, and elections
field more competitive races. Although New Yorkers are now more confident in
City Hall, they lack the same faith in Albany. In state elections, contribution
limits are too high and big money donors reign supreme. New York State would do
well to take a lesson from Ed Koch’s legacy and enact public financing.

New Disclosure Bills Proposed in
New York Legislature

Secret
money spent by outside organizations has become increasingly common in American
elections, including New York State and federal contests. In response, Assembly
Speaker Sheldon Silver has sponsored a bill
that would increase the disclosure requirements imposed on outside spenders. And
State Senator Rubén Díaz has proposed a bill that would
mandate elected officials to post their campaign contributions on their
websites, including the source and amount of each major donation. In the Huffington Post, Ian Vandewalker,
counsel at the Brennan Center, argues that it is important for the public to
know who is behind the political ads they are bombarded with every election
cycle. Voters should be able to make an informed decision on Election Day.

George McDonald Challenges NYC
Contribution Limits in Court

A
Republican candidate for mayor, George McDonald, has
accepted 10 campaign contributions in excess of New York City’s $4,950
legal limit, including one for $40,000. His campaign has also obtained a
$120,000 loan in violation of the City’s election laws. McDonald filed a
lawsuit earlier this year to invalidate the City’s contribution limits, which
he argues run afoul of state law. The case is ongoing, and McDonald and the New
York City Campaign Finance Board are set to appear in court on March 12th.
McDonald would face a $57,050 fine from the New York City Campaign Finance
Board if he doesn’t return the excess contributions. If his legal challenge
prevails, McDonald will likely face no penalty. The City is defending the contribution limits.
Campaign Finance Board spokesman Matthew Sollars said it “reduces the influence
of deep-pocketed special interests and keeps corporate money out of our
elections.”

Corporations Donate $670,000 to New York State Candidates, Save $2.4
Billion in Taxes

A December
report from the US Public
Interest Research Group showed that America loses nearly $150 billion to
corporate tax havens each year. Regional assessment of the data by the Fair
Elections Coalition for New York campaign demonstrates that offshore tax havens cost New York State $2.4
billion in annual tax revenues. Seventeen multinational corporations, including
Bank of America, Citigroup, PepsiCo and Pfizer, sheltered billions of dollars
in these accounts. At the same time, these 17 corporations also contributed
over $670,000 to New York State politicians, including individual legislators,
the Republican Senate Campaign Committee and the Democratic Assembly Campaign
Committee. As Karen
Scharff of Citizen Action explains, “You can never tie a specific policy to a specific to campaign
contribution. But you can tie the overwhelming preponderance of behavior.” At a
time of dire fiscal shortages, and suggested cuts to education and healthcare,
it is critical to reform the system which creates the perverse incentives for
politicians to pass such inequitable tax policies. Citizen-funded elections are
critically needed in New York State. The estimated
cost of $25-$42 million is
well worth it.

On Tuesday, the Supreme Court agreed to hear a challenge to
decades-old federal campaign contribution limits. The case, brought by Alabama
political donor Shaun McCutcheon, seeks
to challenge aggregate contribution limits—the total
amount that a donor may give to candidates, parties and PACs in a cycle. If
the Supreme Court strikes down these aggregate limits, it would represent a
fundamental reassessment of a principle established in Buckley v. Valeo
in 1976—that direct campaign contributions may
be strictly regulated because of their potential for corruption. The lower
court ruled against
McCutcheon, reasoning that without the aggregate limits candidates could
solicit enormous sums and then “know precisely where to lay the wreath of
gratitude.” McCutcheon has stated that he is prepared to abide by contribution
limits to individual candidates and groups, which currently stand at $2,600 per
election to federal candidates, $32,400 per year to national party committees,
$10,000 per year to state party committees and $5,000 per year to other
political committees. However, he objects to the separate two-year aggregate
limits of $46,200 for contributions to candidates and $70,800 for contributions
to groups.

New ABA Resolution
Urges Congress to Mandate Disclosure

The
American Bar Association has adopted
a resolution in support of disclosure of political and campaign spending
during its Midyear Meeting in Dallas. The
resolution, 110B, urges Congress to require all outside spenders to disclose the source
of their funds and the amounts spent. The resolution requests that
contributions “used for making electioneering communications and independent
expenditures,” as well as “the amounts spent for such communications and expenditures”
be publicly disclosed in reports filed with the Federal Election Commission. According to ABA President Laurel Bellows, the new policy “increases
transparency and gives voters the information they need to make informed
decisions.” “Making the amount spent on political communications widely
available is in the public interest and will instill greater confidence in our
electoral system,” she added.

On Wednesday, President Barack Obama
officially nominated Richard Cordray to head the Consumer Financial Protection
Bureau. Cordray formerly served as the Attorney General of Ohio. The CFPB was
established by the Dodd-Frank financial reform legislation as a watchdog agency
to oversee the financial industry. Republican Senate Minority Leader Mitch
McConnell has pledged to filibuster the nomination until several changes are made to weaken the Bureau’s
oversight capacity. Just as outside spending played an
important role in Chuck Hagel’s confirmation battle, campaign contributions from Wall Street may play a role
in Cordray’s. According to FEC filings compiled by the Center for Responsive
Politics, Senator McConnell recently held a fundraiser in New York City at the
offices of Moore Capital Management, a large hedge fund. Additionally, he
received $38,000 from Travelers Insurance donors in the fourth quarter.
Travelers Insurance lobbied
on the implementation of the
financial reform legislation during that period. The American Bankers
Association PAC donated
$5,000 to McConnell’s
Bluegrass Committee leadership PAC on January 1st. A thorough list of contributions
is available on the Public Campaign website. McConnell’s Wall Street donors are
hoping he will stifle the agency in charge of protecting consumers from the
excesses of the financial industry.

Jesse L. Jackson Jr., a former Democratic Congressional
Representative from Illinois, pleaded guilty Wednesday to one felony fraud
count for his use
of $750,000 in campaign funds to pay for personal
expenses. As part of a plea agreement, prosecutors recommended that Jackson
receive a sentence of 46 to 57 months in prison. Robert L. Wilkins, the judge
overseeing the case, is scheduled to sentence Mr. Jackson on June 28. Jackson’s
wife, Sandi, pleaded guilty to falsifying income tax statements while Jackson
was extracting funds from his campaign treasury. Prosecutors will seek a
sentence for her of 18 to 24 months. From 2007 to 2011, Jackson purchased
$10,977.74 worth of electronics at Best Buy, and spent $5,587.75 for a vacation
at the Martha’s Vineyard Holistic Retreat. Other expenditures included $313.89 for
stuffed animals at Build-A-Bear workshop and a $7,000 elk head from a
taxidermist in Montana. “For years I lived off my campaign,” Jackson, said. “I
used money I shouldn’t have used for personal purposes.”

Thursday, February 21, 2013

Unprecedented amounts of secret money were spent on last year’s
federal elections. In fact, spending by shadowy outside groups has
become increasingly pervasive everywhere, including in New York
elections. Unless we change the system with reforms like meaningful
disclosure rules and public campaign financing, this crisis will only
grow worse. Fortunately, key figures in Albany are pushing for more
transparency in our state’s government.

New York State Senator Rubén Díaz recently sponsored a bill
that would require elected officials to post the amounts and sources of
campaign contributions on their websites, increasing the availability
of this key information. Additionally, a bill
sponsored by Speaker Sheldon Silver last month would significantly
increase the disclosure requirements imposed on outside spenders.

Governor
Andrew Cuomo has signaled his strong and committed leadership in the
fight to bring secret political spending out of the shadows. In last
month’s State of the State address,
the governor called for comprehensive campaign finance reform,
including “the nation’s most aggressive disclosure law, period.”

New
Yorkers need these champions of transparency to continue their efforts.
Voters have a responsibility to make informed decisions on Election
Day, and the state must ensure the public has access to all the relevant
facts. Everybody knows the identity of the source is relevant in
deciding how much to trust an election-year message. Viewers of an ad
that argues hydrofracking is safe would take into account whether the ad
was paid for
by the industry that stands to make billions of dollars. And voters
deserve to know how much pro-fracking interests are willing to spend in
favor of certain candidates, when some collect 15 percent or more of their campaign funds from those sources. The same is true of other special interests active in New York politics, from gambling to the soft-drink industry.

Ultimately,
though, while transparency is crucial, it’s only one piece of the
puzzle. A complete solution to the broken system in Albany is a full
package of reforms centered on public financing of elections, so that
candidates have an alternative path to victory that relies on their
constituents and average voters, and not influence-seeking special
interests.

The governor has called for a public financing system
that would provide candidates matching funds for every small donation by
a resident of the district they seek to represent. A similar system has
increased
donor participation and diversity in New York City. Combined with
improved disclosure, lower contribution limits, and sensible enforcement
of campaign finance laws, this type of reform would make Albany
responsive to all the people of New York, rather than those who can
afford to spend the most.

Ian Vandewalker serves as counsel for the Brennan Center’s Democracy
Program where he works on voting rights and campaign finance reform.

Friday, February 15, 2013

Every Friday, the Brennan Center will be compiling the latest
news concerning the corrosive nature of money in New York State politics—and
the ongoing need for public financing and robust campaign finance reform. We’ll
also be linking to dispatches from around the country highlighting the national
scope of this crisis. This week’s links were contributed by Syed Zaidi.

The
New York State Joint Commission on Public Ethics sent to legislators its
long-awaited report on sexual harassment complaints against
sitting Assemblyman Vito Lopez. Last
year, the Assembly secretly approved a $103,000 settlement to end sexual
harassment allegations against Lopez by two female staffers. Gerald B.
Lefcourt, a Manhattan attorney representing Lopez, confirmed that the report
covers sexual harassment claims against Lopez and the $103,000 settlement using
public money. The Legislative Ethics Commission will make the JCOPE report
public within 45 days.

NATIONAL

Florida House Bill Would Practically
Obliterate Contribution Limits

The
Florida House of Representatives is considering a legislative
proposal that would substantially increase the amount of money a
person can contribute to a political campaign. HB 569 is a
top priority for Speaker Will Weatherford. It would allow contributors to
donate up to $10,000 to state candidates, as opposed to the current limit of
$500. In exchange for the higher contributions, the bill would mandate online
disclosure of contributions within 24 hours. Thus far, HB 569 has cleared the
House Ethics and Elections Subcommittee on a 10-2 vote and is currently in the
Appropriations Committee. According to Adam Skaggs, senior counsel at the
Brennan Center, the measure would serve as a form of incumbency protection. A Brennan Center study found
that, compared to states with contribution limits of $2,000 or more, the
likelihood of an incumbent having a viable challenger increases by 15 percent
in states where the contribution limit is set to $500 or less. The average state
contribution limit to legislative candidates in America is $4,000, according to
the National Conference of State Legislators. According to Lloyd Leonard of the
League of Women Voters, "it is not a good deal for the public to
raise contribution limits so that special interest groups can contribute
directly large amounts; it is simply not a tradeoff that is worth
considering."

Gun Lobby Spending Big in Congressional and
State Races

Following
the series of tragic incidents involving gun violence throughout the United
States, interest groups on both sides have ramped up their efforts in state and
federal politics. The most well-known and active group by far, the National
Rifle Association (NRA), spent $18.6 million last year in
Presidential and Congressional contests
through its PAC and lobbying arm. The NRA has been an aggressive player in the
political money game, frequently joining lawsuits concerning campaign finance
reform and significantly outspending gun control proponents. However, new
opposition groups are emerging. The pro-gun control Independence PAC, backed by
New York City Mayor Michael Bloomberg is involved in an Illinois Democratic
Primary, running $660,000 worth of ads
against Congressional candidate Debbie Halvorson. Battle lines are being drawn
in state legislatures as well. In Pennsylvania, Democrats have introduced
a series of gun control bills, and it remains to be seen how their effort
will affect their reelection campaigns. Gun rights
advocates in the state spent
approximately $10,000 in the last election cycle to help elect friendly
candidates.An interactive chart of
aggregate donations on the issue is available at the Sunlight Foundation’s
website.

Former
Representative Jesse L. Jackson Jr. (D-IL) has admitted
to violating campaign finance laws in a plea deal with federal prosecutors.
Representative Jackson was reelected to Congress in November of last year. He
resigned shortly thereafter, citing ongoing health problems. Federal agents
were investigating Jackson’s Congressional campaign fund for irregular
transactions in 2009, 2010 and 2011. Jackson allegedly utilized the funds to
purchase a $40,000 Rolex watch, furniture and travel expenses for a friend.
Federal law prohibits the use of campaign funds for personal expenditures. At
the time of his resignation, the
House Ethics Committee was conducting a probe into separate accusations
that Jackson offered to raise money for former Illinois Governor Rod
Blagojevich (D) in exchange for being appointed to Barack Obama’s vacant Senate
seat. The independent Office of Congressional Ethics referred the matter to the
Ethics Committee in August of 2009 but the Committee’s investigation was
delayed while the Department of Justice prosecuted Blagojevich on 17 corruption
charges.

Senator Wyden and Murkowski Detail
Legislative Proposal on Disclosure

US Senators
Ron Wyden (D-OR) and Lisa Murkowski (R-AK) recently announced a bipartisan
plan to institute campaign finance disclosure. More than $400
million in unaccountable dark money was spent during the 2012 election
cycle by non-profits registered under the 501(c) section of the tax code. These
non-profits operate as political organizations, funneling millions into
campaigns without disclosing their donors. The legislation
would require all groups spending at least $500 in political campaigns to
register and disclose a majority of their donors. Television or radio ads, and
robocalls would be subject to “stand by your ad” provisions mandating
disclosure of the group’s top three donors. In addition, FEC and the IRS would
have to construct joint regulations on donor disclosure, along with an online
database covering all political committees. "When people hear that their
tax dollars are being used to subsidize what are essentially campaign
operations that call themselves social welfare organizations and get these tax
breaks and anonymity, they're just flabbergasted," Senator
Wyden said about conversations he had at town meetings in Oregon. “People
are getting furious.”

Ongoing Menendez Scandal Illustrates Need for
Reform

Last
week, Reform NY informed readers about the ongoing ethics scandal between
Senator Menendez (D-NJ) and a high profile donor, Dr. Solomon Melgen, from
Florida. Menendez contacted
the Centers for Medicare and Medicaid Services in the past to complain about
its finding that Melgen had overbilled the government $8.9 million in Medicare
reimbursements. He also attempted to pressure the Department of Homeland
Security not to donate port security equipment to the Dominican Republic
because it threatened a lucrative contract belonging to a company run by
Melgen. The Senate Ethics
Committee is currently investigating Senator Menendez’s involvement in these
matters. Melgen’s direct
and indirect contributions to Menendez, the Democratic Party and its affiliated Super PACs amount to more than
$1 million. Government watchdog groups are urging
the Senator not to engagein
any business related to Melgen in congressional committee deliberations for the
term of the ethics probe. “He should be recusing himself from any discussions
or negotiations about port security in the Dominican Republic,” said Melanie
Sloan, executive director of Citizens for Responsibility and Ethics in
Washington. Craig Holman, a government affairs lobbyist at Public Citizen,
stated Menendez should “recuse himself if there is a conflict of interest that
could cast the public’s doubt on any decision he might make.”

Friday, February 08, 2013

Every Friday, the Brennan Center will be compiling the latest
news concerning the corrosive nature of money in New York State politics—and
the ongoing need for public financing and robust campaign finance reform. We’ll
also be linking to dispatches from around the country highlighting the national
scope of this crisis. This week’s links were contributed by Syed Zaidi.

For
more stories on an ongoing basis, follow the Twitter hashtag#moNeYpolitics and #fairelex.CAMPAIGN
FINANCE AND ETHICS NEWS

NEW
YORK

Publicly
Financed Elections are Good Business In an op-ed
published Sunday in the Albany Times-Union, co-founder and CEO of the American
Sustainable Business Council, David Levine, explains why business owners are so
enthusiastic about campaign finance reform. A poll
commissioned by the ASBC
indicates that business leaders are dissatisfied with the current role that
money plays in American politics. Other surveys, such as this one by the Committee on
Economic Development
demonstrate support for reform is also strong in the business community; 72
percent are in favor of creating a public financing system that would match
low-dollar contributions and give average citizens more incentives to contribute
to campaigns. Secretive donations to political campaigns and organizations
perpetuate perceptions of corruption, eroding the public’s trust in government
institutions as is necessary for a functioning market and a participatory
democracy. “Underneath the headlines, many business owners still believe that
success should come from hard work, safe and quality products, and good
customer service—not spending on elections.”

Lobbying
Disclosure Reports Available on JCOPE WebsiteThe New
York State Joint Commission on Public Ethics has recently implemented the nation’s first system of
disclosure of funding sources for
specified entities spending in excess of $50,000 per year on lobbying
expenditures. The disclosure is a requirement of the Public Integrity Act of
2011, which seeks to end the practice of black box lobbying, whereby expensive
lobbying gifts are provided to legislators by unrecognizable and hidden groups.
The public will now be better served with information about who is funding the
state’s large lobbying campaigns.

In
Passing Campaign Finance Reform, Senator Klein Holds the KeySenator Jeffrey Klein has been in the news
quite often lately over the Independent Democratic Conference’s decision to
create a ruling coalition with the Republicans in the New York State Senate. It
turns out Klein’s coalition could be instrumental
in determining the fate of campaign finance reform in the state. Governor Andrew Cuomo has
already committed himself to reform; he proposed that the state adopt a system
similar to that of New York City, where small donations are matched with public
funds. Although Senator Klein has stated he supports campaign finance reform,
he has not yet weighed in on any specific proposals.

NATIONAL

Senator
Menendez’s Ethics Scandal Illustrates Need for Campaign Finance Reform The developing scandal involving Senator
Robert Menendez (D-NJ) and Dr. Salomon Melgen, an eye surgeon in Florida, provides
a clear illustration of how mega-dollar campaign contributions can create an
appearance of corruption. Dr. Melgen is under federal
investigation for overbilling Medicare nearly $8.9 million over the past decade. Federal auditors have noted
an abnormally high volume of eye injections, surgeries and laser
treatments performed at his West Palm Beach clinic. Back in 2009, Senator Menendez contacted
federal officials about Melgen’s audit, complaining that it was unfair to penalize the doctor because the billing rules were
ambiguous. Menendez also intervened on Malgen’s behalf in the eye doctor’s
efforts to close a deal to provide port security in the Dominican Republic. Dr. Melgen also happens to be a major
contributor to Senator Menendez, having donated tens of thousands of dollars to his campaigns over the
years and over $700,000 to Majority PAC, a Super PAC that spent $582,500 on
behalf of Mendendez. Now, Menendez is facing a
Senate ethics inquiry regarding two free trips he took in 2010 on Melgen’s
private plane to the doctor’s seaside mansion in the Dominican Republic.
Menendez acknowledged this month that he had not properly disclosed the trips
and wrote a personal check for $58,500 to reimburse Melgen.

Super
PACs and 501(c)’s Compete Over Secretary of Defense Nomination The flood of outside spending on elections
has spilled over into the nomination process for positions in the Obama
Administration. Several groups are levying
funds to gather public opposition to Senator Chuck Hagel’s nomination for Secretary of Defense. According
to the Sunlight Foundation’s Political
Ad Sleuth, outside
groups have already spent at least $212,000 on television advertisements
to torpedo Senator Hagel’s chances. Use
Your Mandate, a new organization which presents
itself as a liberal gay rights group but purchases its television time through
a prominent Republican firm, is attacking Hagel as “anti-Gay,” “anti-woman” and
“anti-Israel” in ad slots during popular Sunday morning political talk shows.
The American
Future Fund, a dark money group, has spent $14,000
on an ad to air on Fox News Sunday that attacks Hagel's personal financial
assets. Meanwhile Hagel’s supporters such as the Bipartisan Group
have placed ads, valued at $35,000, in Mike Allen's Playbook, a popular email
newsletter put out by Politico. In the post-Citizens
United world, the nomination process has evolved into a drawn out political
campaign fueled by interest group spending.

Obama Considering Major Donor for Secretary
of Commerce

President Obama is considering nominating
Penny Pritzker, a successful businesswoman from Chicago, for Secretary of
Commerce. Pritzker, part of the Hyatt Hotel dynasty, has
experience running a real estate company and serving on the boards of Hyatt, the credit-reporting
company TransUnion, and the Wm. Wrigley Jr. Company. She has also been a
prominent donor to the Obama campaign and Senate Democrats. Pritzker chaired Obama’s national
fundraising operation during his 2008 campaign, helping him raise nearly $750
million. In 2012, she bundled over $500,000 for the campaign. Since 1990, she
has contributed
to no fewer than 73 Senate candidates, including a grand total of $32,800 to the 13 members of the Senate
Committee on Commerce, Science and Transportation. Although Pritzker may well
be qualified for the position, the practice of awarding mega-donors with plush
ambassadorships and, in rare instances, cabinet positions casts presidential
nominations in unseemly light.

Campaign Funds of Former
Politicians Used as “Slush Funds”

A review of campaign
finance reports by USA TODAY shows that former House members that lost
races are using their leftover campaign funds to pay for everything from luxury
cars to obscure foundations that bear their names. Federal laws allow former
lawmakers to keep their campaign accounts active indefinitely and dole out funds
to candidates, political parties and charities. The money also can be used to
pay any lingering campaign expenses – such as gifts for volunteers and salaries
for any remaining staffers. Florida Republican Allen West had a stockpile of
$900,000 in his war chest after his unsuccessful bid for Congress. He donated
$250,000 each to the Allen West Foundation and the American Legacy Guardians.
The organizations share a post office box in Boca Raton, Florida. As to their
mission or purpose, West has stated that will be forthcoming. Former
Congressman Edlophus Towns from New York retired in April of 2012 but continued
to make $602 monthly payments to Infniti Financial Services for a leased
vehicle. The campaign also bought a $2,300 computer from an Apple store in
Manhattan on November 28th.
Melanie Sloan, executive director of Citizens for Responsibility and
Ethics in Washington, stressed that politicians should be required to close
their campaign accounts after a fixed time period "because they give the
appearance of being treated as slush funds."